TY - JOUR
AU - Ben-David,Dan
AU - Loewy,Michael B.
TI - Free Trade, Growth, and Convergence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 6095
PY - 1997
Y2 - July 1997
DO - 10.3386/w6095
UR - http://www.nber.org/papers/w6095
L1 - http://www.nber.org/papers/w6095.pdf
N1 - Author contact info:
Dan Ben-David
Berglas School of Economics
Tel Aviv University
Ramat Aviv, Tel Aviv 69978
Israel
Tel: 972/3/640-9912
Fax: 972/3/640-9908
E-Mail: danib@post.tau.ac.il
M2 - featured in NBER digest on 1998-01-01
AB - What is the impact on output of movement towards free trade? Can trade liberalization have a permanent effect on output levels, and more importantly, does it have an impact on steady-state growth rates? The model developed here emphasizes the role" that knowledge spillovers emanating from heightened trade can have in income convergence and growth rates over the long run. The model also facilitates an analysis of the dynamic behavior of income levels and terms of trade as well as growth rates during the transition between steady states. Among the results of the model, unilateral liberalization by one country induces a level effect on the liberalizing country that reduces the income gap between it and other wealthier countries. In some cases, the liberalizing country may even leapfrog over initially wealthier countries. From the long-run growth perspective, unilateral (and multilateral) liberalization generates a positive impact on the steady-state growth of all the trading countries.
ER -